Stock Upgrades, Downgrades From TheStreet.com Ratings
Each business day, TheStreet.com Ratings updates its ratings on the stocks it covers. The proprietary ratings model projects a stock's total return potential over a 12-month period, including both price appreciation and dividends. Buy, hold or sell ratings designate how the Ratings group expects these stocks to perform against a general benchmark of the equities market and interest rates.
While the ratings model is quantitative, it uses both subjective and objective elements. For instance, subjective elements include expected equities market returns, future interest rates, implied industry outlook and company earnings forecasts. Objective elements include volatility of past operating revenue, financial strength and company cash flows.
SunTrust Banks (STI) is the holding company for SunTrust Bank, which provides financial services to consumer and corporate customers. It has been downgraded to hold from buy.
Third-quarter revenue rose by 1.9% compared with the same period last year, trailing the industry average of 16.3%. The company also demonstrates reasonable valuation levels and good cash flow from operations. SunTrust's return on equity in the third quarter improved slightly when compared with the same period one year prior. This can be construed as a modest strength within the organization.
As a counter to these strengths, the company's earnings fell 19.7% to $1.18 per share in the third quarter compared with $1.47 a share in the year-ago period. SunTrust's stock fell 26% in the last 12 months, and while the decline might be a factor that makes it an attractive buy down the road, right now we believe that it is too soon to buy. SunTrust had been rated a buy since March 2006.
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